ASIR loan

€300,000

Target fulfilled: 100%

Closed

SummaryPicturesDocuments

Introduction

Advanced Sports Installations Europe AS (“ASIE”, “the Company”) is a company specializing in the handling of synthetic turf fields. Founded in 1992, the Company has participated in the fitting of 1,200 football fields across 24 countries in Europe and removed worn out turf from more than 300 fields, such as the Henningsvaer pitch in Norway, Jämkraft Arena in Sweden and Allianz Arena in the United Kingdom. ASIE has a key competitive advantage: it is the first company in Europe to use a unique technology of artificial turf removal, separation into components and recycling. In addition, ASIE also offers a “Rent a field” service.

ASIE is going to offer their services in the Netherlands starting from Q2 of 2019. In order to increase working capacity and execute important upcoming contracts, the Company is looking for additional working capital financing of EUR 300,000 for a 12-month period. The loan will be issued to ASIR (Advanced Sports Installations & Recycling BV [which has recently been established], “ASIR”). ASIR’s founder is the 80% owner of ASIE and a member of the executive board Mr Raul Lättemägi. The loan will carry a 15.0% annual interest rate (with quarterly payments) with principal payment at the end of the loan term. The loan is secured with a share pledge of 80% of ASIE’s shares and personal warranty in the amount of EUR 300,000 from the main owner of ASIE and the 100% owner of ASIR Mr Raul Lättemägi.

There are a number of factors that make an investment in ASIE loan an attractive opportunity. The main highlights:

Good references: ASIE’s team has extensive experience in the European market. Over ten fields installed by the company have been certified by FIFA, including the Södertälje football field in Sweden and København S field in Denmark,

Increase in demand: ASIE provides a zero-waste solution to a growing problem of waste generated from old turf fields. Many local governments in the Netherlands have expressed interest in ASIE’s services, especially since there is a lack of providers of artificial turf utilisation and preliminary talks have been conducted;

An alternative scenario if the project does not succeed: ASIE could repay the loan in about 3 years from existing cash flows;

Good collateral base - 80% share pledge of ASIE and a warranty from the CEO and the majority owner Raul Lättemägi in the full amount of the loan

Company overview

Henningsvaer artificial turf field in Norway - installed by ASIE

Advanced Sports Installations Europe has over 25 years of experience in artificial turf installation and recycling.

The main service offered by the Company is the “ARENA Concept” - an on-site handling solution for turf that enables used artificial grass to be reused or recycled in a sustainable way. It includes the removal of artificial grass and the subsequent processing of the materials, preparation for reuse in new sports fields or recycling of the materials that can then be used in other industries. The Company has developed its own proprietary equipment and processes that allow for a quicker turnaround at a lower cost compared to competitors. ASIE is the only company in the field that fully operates on the circular economy principle: ASIE is able to fully recycle the waste from old turf fields, either by reusing them in the installation of new fields or preparing components of the turf for use in the plastics industry.

ASIE also offers operating lease services for fifth-generation artificial turf (5G). This service is geared towards local municipalities and smaller football clubs that might find the upfront cost of a new field and arranging maintenance and recycling difficult. ASIE provides the artificial turf, maintenance and recycling for a monthly payment.

Market

Two-thirds of all artificial turf fields are located in Europe. The countries with the greatest number of fields are the Netherlands, UK and Turkey that have over 300 football fields certified by FIFA and an unknown number of uncertified fields.

On average, an artificial turf field needs replacing every 4 - 10 years. An average of 250 tons of waste is generated as a result of the replacement. There are about 2 200 artificial football fields in the Netherlands, approximately 10% of which need to be replaced each year. In addition to these, artificial turf hockey fields are also very common in the Netherlands. A common problem in the Netherlands is the incorrect handling of the waste, where recycling companies cease operations after depositing the waste on a landfill site rented from the government. As a result, the local government ends up being responsible for the problem. Two major recyclers in the Netherlands have recently stopped their operations like this. As a result, local governments in the Netherlands have shown great interest in ASIE’s unique technology and ASIE has a window of opportunity to enter the market.

Financing need

ASIE has already secured a site for storing and recycling the artificial turf, made agreements with key suppliers and local municipality. The Company is on track to launch the operations in early Q2 2019.

ASIE needs EUR 300,000 of working capital to start recycling operations in the new site in the Netherlands. The loan will be issued to the Netherland's company ASIR which has recently been established. ASIR’s 100% owner is Mr Raul Lättemägi, ASIE’s majority shareholder (80%).

The company’s plans to start operations in Q2 of 2019 have been so far been on schedule. ASIR has secured a recycling site in Dongen in the southern part of the Netherlands and started an application to acquire the right to recycle turf on the site. The company is currently on track to start recycling turf at the start of the season in early June. In 2019, the company plans to recycle 60 fields and in 2020 120 artificial turf fields which corresponds to 24 000 tons of waste.

Ownership Structure

Financials

ASIE has demonstrated continuous revenue growth. Company’s management estimates that the launch of operations in the Netherlands will generate EUR 2 million in revenue in 2019. ASIE already has a long-term local banking partner which has granted a EUR 800,000 loan to the Company. The Company has a strong equity position with solid cost structure which generates good operating margins.

ASIE financials. The source of results of 2018 is management financial reports. Review the 2018 financials in the "Documents" section.

Awards and recognitions

ASIE has received grants from the EU’s research and innovation program Horizon 2020 to develop the ARENA concept of turf recycling and to create prototypes of the machinery. In addition to that, ASIE has received grants from Enterprise Estonia, the Estonian Environmental Investment Centre and the European Regional Development fund.

2017 - The overall winner of the Environmentally Friendly Company competition of Estonia

2018 - Silver level award of the Responsible Business Index of the Responsible Business Forum Estonia

Risks

Competition risk- Competitor activities, such as innovations in pricing, improvements in promotional and marketing activities and business strategies, may jeopardize ASIR’s sales or profitability or increase costs, which may, in turn, have a material adverse effect on ASIR’s business, financial position, results of operations and future prospects and, thereby, on ASIR’s ability to fulfil its obligations under the “ASIR loan”, as well as the value of the “ASIR loan”.

Business risk - Entering new markets carries risks due to unfamiliarity with the clients, suppliers and regulations. This may jeopardize ASIR’s sales or profitability or increase costs, which may, in turn, have a material adverse effect on ASIR’s business, financial position, results of operations and future prospects and, thereby, on ASIR’s ability to fulfil its obligations under the “ASIR loan”, as well as the value of the “ASIR loan”.

Financial risks - Financial risks, including credit, currency, liquidity and interest rate risks may arise due to changing economic conditions or the operations of suppliers or clients. This may jeopardize ASIR’s sales or profitability or increase costs, which may, in turn, have a material adverse effect on ASIR’s business, financial position, results of operations and future prospects and, thereby, on ASIR’s ability to fulfil its obligations under the “ASIR loan”, as well as the value of the “ASIR loan”.

Operational risks - Operational risks due to inefficiencies in management or business processes may jeopardize ASIR’s sales and profitability or increase costs which may, in turn, have a material adverse effect on ASIR’s business, financial position, results of operations and future prospects and, thereby, on ASIR’s ability to fulfil its obligations under the “ASIR loan”, as well as the value of the “ASIR loan”.